Operators left with six-figure gap in budget after Job Retention Bonus payout postponed

09 November 2020 by
Operators left with six-figure gap in budget after Job Retention Bonus payout postponed

Hospitality operators say they are losing trust in government with some facing six-figure gaps in their balance sheets after the payout of the Job Retention Bonus (JRB) was postponed.

The scheme, which was set to open for claims in February, was due to pay employers £1,000 for each member of staff retained until the end of January.

But it has been deferred following the extension of the furlough scheme to March, leaving businesses scrambling to balance their budgets.

Steve Lomas, managing director of Suffolk pub group Deben Inns, told The Caterer he felt "severely let down".

He said: "We've got 100-120 staff that we were endeavouring to keep on the books, and I was taking the chancellor at his word that we'd be getting £1,000 per employee. That's a six-figure sum that's been snatched from our cashflow.

"Once you've given business leaders an idea of a plan it's pretty churlish to take that away. I accept it's an impossible situation for [government]… but it makes you question whether you can trust what they are telling you."

Nathan Evans (pictured), managing partner at Smith & Wollensky steakhouse in London, said he had budgeted to receive a £54,000 grant under the scheme that had now disappeared.

He said: "I've got to go back to our shareholders and ask them to top up the money. I can't borrow anything, no one wants to lend money to the hospitality sector, and the banks certainly don't. This is like a time bomb."

He added that although the business was doing ‘better than expected' selling steak boxes to cook at home, it wasn't enough to pay core staff not on furlough. Evans said the government needs to offer further support to businesses to cover costs besides wages.

He said: "I'm not going to knock the furlough scheme, it's amazing, but there's been virtually no help for [operators] other than the business rates holiday and cut to VAT.

"The government-backed loan we were offered from NatWest was pitiful. A business our size can claim £3,000 a month grant [from the government], but that doesn't even keep the lights on and IT systems going."

Chancellor Rishi Sunak has said the JRB will be reintroduced "at the appropriate time", but operators warned it could come too late for some businesses.

Roxane Marjoram, co-owner of the Gusto Pronto group, which runs five pubs and a brewery in Suffolk, said: "That time difference could be critical for some people. January and February is a tricky time of year for the trade even after a normal Christmas. We're all conscious that period could be very tough next year.

"We know it's a fast-changing situation and there's been a lot of help for the trade. Hospitality employs a huge number of people around the country, and while we're grateful for the support, all of us are fighting every day to save as many jobs as possible."

She added that it would be more difficult for hospitality businesses to trust in government announcements: "I appreciate that furlough being extended does complicate things, but the fact remains the government did announce the JRB would come in. There's a real concern about how much we in the trade will be able to trust what the government says if they make an announcement and then withdraw or defer it. It will mean there's a loss of confidence in announcements of financial support, and that is very worrying."

Lomas added that it was "impossible" to plan when the support available kept changing: "How can you plan for the future when a scheme is there one minute then snatched away the next?"

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